"The market reacted based on what everyone in the market thinks other people are going to do," Blum said on "Squawk Box. "It's that classic Keynesian reaction. The market is like a beauty pageant where all the judges vote based on the other judges, and how they're going to cast their ballots."

The markets appeared starved for information on the Fed's monetary policy as the central bank scales down its quantitative easing program and plans to raise interest rates from near zero, Blum said, Yellen gave them little to work with, but the six-month range on raising rates was "a little bit of a gaffe." Still, he added, the window gives her plenty of time to adjust policy if inflation picks up, for example.

Drew Matus, senior economist at UBS, told CNBC that Yellen's timeline for interest rate hikes shouldn't have surprised traders. He said the Fed already mentioned raising rates as early as 2015 more than year ago.

'People who do math for a living in the financial markets should be able to add six months to December and figure out that that is not a pulling forward of the rate-hike cycle," Matus said. "People thought they heard something new. They thought the taper was going to end much more quickly."

Kathy Lien, a managing director at BK Asset Management, told CNBC that the currency, equity and Treasury markets responded in tandem to Yellen's statement, which suggests the Fed chief's comments came out more clearly than others have suggested.

"That tells us everyone took away the same message from the central bank, which is yields are headed higher," Lien said.

In a market bracing for higher interest rates, investors should evaluate companies for their dependence on super-low interest rates and look toward companies with less reliance on the Fed's easy money policies for growth, said Eric Marshall, a portfolio manager with Hodges Funds.

Michael Farr, president of Farr, Miller & Washington and a CNBC contributor, said certain sectors should still perform well in the stock market despite normalizing interest rates. He highlighted health-care stocks, the tech sector and companies banking on the trend toward natural and organic foods. Still, investors should remain wary, he told CNBC.

"There's no need to swing for the fences in a market like this," Farr said. "Stocks aren't cheap. ... There's risk here. We haven't had a pullback in over two years. That's just too weird for an old hand like me."